The value of a college degree

CHRISTOPHER REYES
BUSINESS EDITOR
@cdrey

Acorns is one of the smartest, most college student-relevant smartphone apps ever released.

The app automatically invests spare change into a well-managed and diversified portfolio. For example, when a user makes a $3.75 purchase using a credit or debit card, Acorns rounds up to the nearest dollar and will invest $0.25 into a portfolio that matches the user’s risk preference.

More important than the app’s functionality is the problems that it solves.

The importance of investing is often overlooked by college students, most of whom put it off until after graduation. But investing early in life is one of the easiest ways to increase future portfolio value. It all comes down to the concept of compound interest.

Compound interest is the simple idea that as investments accrue interest, the interest will in turn accrue even more interest. Over long periods of time, compound interest becomes incredibly powerful. By waiting to invest, a person gives up some of benefits of compound interest.

The app also diversifies user investments. The app offers six portfolios ranging from conservative to aggressive that reinvest dividends and are automatically rebalanced.

For me, the task of diversifying a portfolio, especially with the small amount of money I am able to invest, is daunting and time consuming.

A portfolio that is available to anyone with a smartphone is an incredible step towards removing traditional obstacles from investing.

The other obstacle facing students is the need for money to invest. It is difficult for a college student to tie up money in an investment because the benefits of the investment are not yielded for such a long time. An investment does not appeal to a student who would rather put the money into something tangible like food, drinks or recreation.

Acorns allows one to invest without the need for a large upfront cost. All the investments come from spare change that most people are unlikely to notice. Most people mentally round up expenses already, so putting spare change into a portfolio does not affect the perception of how much one is spending.

I think the type of investing this app provides is ideal for college students. To the average student at the University of San Diego, investing is boring and can be put off until after graduation when the “real world” starts. Not investing during college is not a fatal mistake, but it just makes sense to invest, especially with an app like Acorns available. Why not save a little money and earn a little bit of interest without ever really spending anything?

There is no longer an excuse for college students to postpone investing.